THE BANK OF THE FUTURE: START WITH THE CUSTOMER AND THINK OUTSIDE-IN

Banks are under greater pressure than ever to attract and retain customers. A perfect storm consisting of new, innovative digital financial services, forthcoming regulatory changes such as PSD2 and soaring customer expectations is brewing. In order to stay relevant, banks need to overhaul their strategy and start putting their customers first.

Too often banks have an inside-out mindset. They focus on the products that they can build – generally ones that will be the most profitable – then push them out to customers. What banks should be doing is reversing this to an outside-in mindset. This begins with thinking about the customer, what kinds of products and services they want, and building a seamless experience for them.

In the past banks have not thought too hard about providing the best possible customer experience. With low levels of churn, they could get away with this, as customers knew that signing up for an account with a different bank would be such a hassle. However, times have changed. There are more choices for customers than ever – new digital challengers have emerged, with cutting edge technology and slick, personalised user experience. Also, customers are now used to a world where they can watch whatever movie or TV show they want at the touch of a button, where they can get a taxi to pick them up within minutes no matter where they are – all through their smartphones. Banks that don’t offer the same levels of digital convenience are in danger of becoming yesterday’s news.

The first impression that a customer gets of a bank is when they sign up. If this onboarding process is difficult then they are highly likely to abandon the application before they finish it, and the bank will have probably lost this customer for good. If the bank makes the process easy and efficient, the customer will hold the bank in high regard.

There is additional pressure for banks to do a better job with digital services with the introduction of PSD2 regulations, which will come into force in January 2018. Banks will have to open up customer data to third parties, meaning other banks and fintech startups could come along and steal customers away.

While most retail banks now have basic mobile apps for their customers, they often bear no resemblance to the online banking service that the customer uses on their computer, or the service they receive when they speak to telephone operators and in branch. The result is a confusing mess that is inconvenient for the customer and inefficient for the bank.

Banks need to ensure they offer a consistent service to their customers, no matter what touch point the customer uses. To achieve this, they need to find a way to unify their digital services, enabling better cohesion between all departments and putting customers at the centre of their thinking. This begins at the onboarding process, with the creation of a standardised procedure no matter what device – or combination of devices, as they may start the process on their smartphone and finish it on their computer – a customer is using. The same steps should be replicated across all devices, in order to make the overall process simpler for the customer and more efficient for the bank.

By adopting this omni-channel, customer-centric approach, the bank is able to easily help a potential customer who is having difficulties with the process no matter what device they are using and which stage they are at. It can also alert the bank to where the bottlenecks and drop-off points are in the onboarding process so they can fix them.

As well as the on boarding process, all of the services that a bank offers need to be based on the same logic, offering anyone – customer or bank employee – the same journey regardless of the device or platform they are using. With these digital building blocks, they can ensure that they have a template to build any future services around so they will work seamlessly with all of their existing services.

In order for banks to become truly omni-channel they need to undertake a digital transformation that underpins all of their services. Digital transformation requires more than just investment – it needs a whole new strategy. Banks need to follow the outside-in example, borrowing from the ‘agile’ principle adopted by many tech startups, where small, multi-disciplinary squads are formed, banks need to re-platform all of their services in order to make them all coherent. This will benefit the customer and create efficiencies for the bank in the long term, even if it does mean some short-term pain.